FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended July 31, 1999
------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended _______________________to _______________________
---------------------------------------
Commission File No.0-20234
TODAY'S MAN, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-1743137
- ------------------------------------ --------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
835 LANCER DRIVE, MOORESTOWN, NJ 08057
- --------------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number 609-235-5656
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Not Applicable
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Former name, former address and former fiscal year,
if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
--- ---
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN A BANKRUPTCY DURING THE PRECEDING
FIVE YEARS
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES X NO
--- ---
27,014,635 common shares were outstanding as of September 13, 1999.
<PAGE>
TODAY'S MAN INC.
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION:
Item 1. Condensed Consolidated Financial Statements - Unaudited
Consolidated Balance Sheets
July 31, 1999 and January 30, 1999...............................1
Consolidated Statements of Operations
Thirteen weeks ended July 31, 1999 and August 1, 1998............2
Consolidated Statements of Operations
Twenty-six weeks ended July 31, 1999 and August 1, 1998..........3
Consolidated Statements of Cash Flows
Twenty-six weeks ended July 31, 1999 and August 1, 1998..........4
Notes to Consolidated Financial Statements.....................5-6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.....................................7-10
Item 3. Quantitative and Qualitative Disclosures about Market Risks.....10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings...............................................11
Item 2. Changes in Securities and Use of Proceeds.......................11
Item 3. Defaults Upon Senior Securities.................................11
Item 4. Submission of Matters to a Vote of Security Holders.............11
Item 5. Other Information...............................................11
Item 6. Exhibits and Reports on Form 8-K................................12
Signatures.........................................................13
<PAGE>
TODAY'S MAN, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
July 31, January 30,
1999 1999
----------- -----------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 230,900 $ 1,181,100
Due from credit card companies and other receivables, net 2,038,400 1,535,300
Inventory 34,061,000 34,636,600
Prepaid expenses and other current assets 4,630,100 3,903,800
Prepaid inventory purchases 1,521,600 3,038,600
----------- -----------
Total current assets 42,482,000 44,295,400
Property and equipment, less accumulated depreciation and
amortization 33,188,300 32,664,900
Loans to shareholders 228,400 228,400
Rental deposits and other noncurrent assets 1,877,100 1,785,600
----------- -----------
$77,775,800 $78,974,200
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 5,206,100 $ 5,719,400
Accrued expenses and other current liabilities 2,670,400 5,827,200
Capital lease obligations 524,100 821,600
----------- -----------
Total current liabilities 8,400,600 12,368,200
Capital lease obligations, less current maturities -- 216,000
Deferred rent and other 4,637,500 4,750,000
Obligation under revolving credit facility 13,508,300 8,945,700
----------- -----------
26,546,400 26,279,900
Shareholders' equity:
Preferred stock, no par value, 5,000,000 shares authorized, none issued
Common stock, no par value, 100,000,000 shares authorized,
27,014,635 and 27,014,485 shares issued and outstanding at
July 31, 1999 and January 30, 1999 respectively 48,451,600 48,451,200
Retained earnings 2,777,800 4,243,100
----------- -----------
Total shareholders' equity 51,229,400 52,694,300
----------- -----------
$77,775,800 $78,974,200
=========== ===========
</TABLE>
See accompanying notes.
1
<PAGE>
TODAY'S MAN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THIRTEEN WEEKS ENDED
------------------------------
July 31, August 1,
1999 1998
------------ ------------
<S> <C> <C>
Net sales $ 47,518,300 $ 51,580,100
Cost of goods sold 31,160,300 33,685,400
------------ ------------
Gross profit 16,358,000 17,894,700
Selling, general and administrative expenses 17,590,500 16,016,200
------------ ------------
Income (loss) from operations (1,232,500) 1,878,500
Interest expense and other income, net 287,900 774,500
------------ ------------
Income (loss) before income taxes (1,520,400) 1,104,000
Income taxes (benefit) (559,000) 408,500
------------ ------------
Net income (loss) $ (961,400) $ 695,500
============ ============
Earnings (loss) per share - basic $ (0.04) $ 0.03
Weighted average shares outstanding 27,014,533 27,278,687
Earnings (loss) per share, assuming dilution $ (0.04) $ 0.03
============ ============
Weighted average shares outstanding, assuming dilution 27,014,533 27,308,569
</TABLE>
See accompanying notes.
2
<PAGE>
TODAY'S MAN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR TWENTY-SIX WEEKS ENDED
------------------------------
July 31, August 1,
1999 1998
------------ ------------
<S> <C> <C>
Net sales $ 92,402,300 $ 97,833,500
Cost of goods sold 59,795,400 63,140,600
------------ ------------
Gross profit 32,606,900 34,692,900
Selling, general and administrative expenses 34,300,000 31,355,900
------------ ------------
Income (loss) from operations (1,693,100) 3,337,000
Interest expense and other income, net 534,700 1,531,700
------------ ------------
Income (loss) before income taxes (2,227,800) 1,805,300
Income taxes (benefit) (762,500) 668,000
------------ ------------
Net income (loss) $ (1,465,300) $ 1,137,300
============ ============
Earnings (loss) per share - basic $ (0.05) $ 0.04
============ ============
Weighted average shares outstanding 27,014,533 27,277,485
Earnings (loss) per share, assuming dilution $ (0.05) $ 0.04
============ ============
Weighted average shares outstanding, assuming dilution 27,014,533 27,699,157
</TABLE>
See accompanying notes.
3
<PAGE>
TODAY'S MAN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR TWENTY-SIX WEEKS ENDED
------------------------------
July 31, August 1,
1999 1998
------------ ------------
<S> <C> <C>
Operating activities
Net income (loss) $ (1,465,300) $ 1,137,300
Adjustments to reconcile net income (loss) cash used in operating
activities:
Depreciation and amortization 1,798,100 1,906,500
Accretion of debt discount -- 202,100
Deferred credits (112,500) 349,400
Tax benefit of net operating loss carryforward -- 668,000
Changes in operating assets and liabilities:
Decrease (increase) in receivables (503,100) 420,000
Decrease (increase) in inventory 575,600 (2,000,500)
Decrease (increase) in prepaid expenses and other current assets 790,700 (1,801,800)
Increase in rental deposits and other non current assets (91,500) (1,228,400)
Decrease in payables, accrued expenses and liabilities subject to
settlement (3,670,100) (14,302,500)
Decrease in restricted cash -- 7,932,800
Total adjustments (1,212,800) (7,854,400)
------------ ------------
Net cash used in operating activities (2,678,100) (6,717,100)
Cash flow used in investing activities:
Capital expenditures (539,600) (196,000)
Fixtures and equipment in process (1,782,000) --
------------ ------------
Net cash used in investing activities (2,321,600) (196,000)
Cash flow provided by (used in) financing activities:
Repayment of capital leases (513,500) (690,800)
Borrowings under revolving credit facility 83,987,800 35,315,000
Repayment of term loan and revolving credit facility (79,425,200) (27,618,400)
Proceeds from exercise of stock options and common stock purchase
warrants 400 12,800
------------ ------------
Net cash provided by financing activities 4,049,500 7,018,600
Net increase (decrease) in cash and cash equivalents (950,200) 105,500
Cash and cash equivalents at beginning of period 1,181,100 219,500
------------ ------------
Cash and cash equivalents at end of period $ 230,900 $ 325,000
============ ============
</TABLE>
See accompanying notes.
4
<PAGE>
TODAY'S MAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited consolidated financial statements, which include
the accounts of the Company and its wholly owned subsidiaries, have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. All significant intercompany transactions and accounts
have been eliminated in consolidation. In the opinion of management, all
adjustments (consisting only of normal recurring accruals) considered necessary
for a fair presentation have been included. Due to the seasonal nature of the
Company's sales, operating results for the interim period are not necessarily
indicative of results that may be expected for the fiscal year ending January
29, 2000. For further information, refer to the consolidated financial
statements and footnotes thereto which are included in the Company's Annual
Report on Form 10-K for the fiscal year ended January 30, 1999.
As of January 31, 1998, the Company effected a quasi-reorganization through
the application of $27,316,200 of its $74,115,700 Common Stock account to
eliminate its retained deficit. The Company's Board of Directors decided to
effect a quasi-reorganization given that the Company had completed its
restructuring, obtained long-term financing and successfully emerged from
bankruptcy. The Company's retained deficit at January 31, 1998 was related to
operations that resulted in the restructuring of the Company and the losses
incurred during the Chapter 11 proceeding and was not, in management's view,
reflective of the Company's current financial condition.
2. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
3. EARNINGS (LOSS) PER COMMON SHARE
Earnings (loss) per share is calculated following Financial Accounting
Standards Board Statement No. 128 Earnings per Share. Statement 128 requires
companies to present basic and diluted earnings per share. Basic earnings per
share excludes any dilutive effect of outstanding stock options whereas diluted
earnings per share includes the effect of such items. There is no difference
between basic and diluted earnings per share for the current period because the
effect of the Company's common share equivalents would be anti-dilutive.
5
<PAGE>
TODAY'S MAN, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities, which is required to be adopted in fiscal
2000. The Company expects to adopt the new Statement effective February 2, 2002.
The Statement will require the Company to recognize all derivatives on the
balance sheet at fair value. Derivatives that are not hedges must be adjusted to
fair value through income. If a derivative is a hedge, depending on the nature
of the hedge, changes in the fair value of the derivative will either be offset
against the change in fair value of the hedged asset, liability, or firm
commitment through earnings, or recognized in other comprehensive income until
the hedged item is recognized in earnings. The ineffective portion of a
derivative's change in fair value will be immediately recognized in earnings.
The Company does not anticipate that the adoption of this Statement will have a
significant effect on its results of operations or financial position.
In March, 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position (SOP) No. 98-1 "Accounting for the Costs of
Computers Software Developed or Obtained for Internal Use." The Company followed
the SOP in accounting for the costs of computer software obtained for internal
use during 1998. SOP 98-1 is consistent with the Company's prior accounting
policies in all material aspects.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INVESTMENT CONSIDERATIONS
In analyzing whether to make, or to continue, an investment in the Company,
investors should consider, among other factors, certain investment
considerations more particularly described in "Item 1: Business - Investment
Considerations" in the Company's Annual Report on Form 10-K for the year ended
January 30, 1999, a copy of which can be obtained, without charge except for
exhibits to the Report, upon written request to Mr. Frank E. Johnson, Executive
Vice President and Chief Financial Officer, Today's Man, Inc., 835 Lancer Drive,
Moorestown, New Jersey 08057.
SAFE HARBOR STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
Certain statements in this Form 10-Q which are not historical facts,
including, without limitation, statements as to the Company's planned results
for 1999, new store openings, estimated costs of new systems, and the costs to
address year 2000 compliance, or as to management's beliefs, expectations, or
opinions, are forward looking statements that involve risks and uncertainties
and are subject to change at any time. Certain factors, including, without
limitation the risk that the assumptions upon which the forward-looking
statements are based ultimately may prove incorrect, risks relating to the
Company's growth strategy, small store base and geographic concentration, the
declining unit sales of men's tailored clothing, seasonality and general
economic conditions, the ability of the company and its suppliers to complete
assessment, testing and remediation of year 2000 issues and the other risks
detailed from time to time in the Company's filings with the Securities and
Exchange Commission, including, without limitation, its Annual Report on Form
10-K, can cause actual results and developments to be materially different from
those expressed or implied by such forward-looking statements. See "Investment
Considerations" above, for instructions on how to receive a copy of the
Company's Annual Report.
RESULTS OF OPERATIONS:
The following table sets forth, as a percentage of net sales, certain items
appearing in the consolidated statements of operations for the thirteen week
periods ended July 31, 1999 and August 1, 1998, respectively.
<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
THIRTEEN AND TWENTY-SIX WEEKS ENDED
------------------------------------------------------
July 31, Aug. 1, July 31, Aug. 1,
1999 1998 1999 1998
-------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 65.6 65.3 64.7 64.5
------------------------------------------------------
Gross profit 34.4 34.7 35.3 35.5
Selling, general and administrative expenses 37.0 31.1 37.1 32.1
------------------------------------------------------
Income (loss) from operations (2.6) 3.6 (1.8) 3.4
Interest expense and other income, net 0.6 1.5 0.6 1.6
------------------------------------------------------
Income (loss) before income taxes (3.2) 2.1 (2.4) 1.8
Income taxes (benefit) (1.2) 0.8 (0.8) 0.6
------------------------------------------------------
Net income (loss) (2.0)% 1.3% (1.6)% 1.2%
======================================================
</TABLE>
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
THIRTEEN WEEKS ENDED JULY 31, 1999 AND AUGUST 1, 1998:
NET SALES. Net sales decreased $4,061,800 or 7.9% in the second quarter of
fiscal 1999 compared to the year ago period. Comparative store sales decreased
7.9%. The decrease in net sales is a result of the strategic decision to delay
the promotion of the semi-annual clearance event in order to emphasize the value
of the Today's Man brand and everyday low price philosophy. There were 25
superstores in operation at July 31, 1999 and August 1, 1998, respectively.
GROSS PROFIT. Gross profit as a percentage of net sales dropped to 34.4% for the
second quarter 1999 compared to 34.7% for second quarter 1998. The decrease in
the gross profit percentage is a result of more markdowns taken in order to
cleanse inventories in anticipation of the Fall 1999 selling season.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $1,574,000 or 9.8% in the second quarter of
fiscal 1999, and increased as a percentage of sales to 37.0% from 31.1% in the
second quarter of fiscal 1998. This increase was due a $1,100,000 cost of
promoting a clearance event to cleanse inventories at the end of the
thirteen-week period that ended July 31, 1999. The Company also incurred
approximately $400,000 in administrative expenses related to inventory
replenishment and an investment in human resources.
INTEREST EXPENSE AND OTHER INCOME, NET. Interest expense, interest income and
other expense, net decreased by $486,600 from the second quarter of fiscal 1998.
The decrease in interest expense is attributable to the refinancing of the
Company's revolving credit facility with Mellon Bank on December 4, 1998 which
bears interest at prime (8.0% at July 31, 1999). The Mellon Bank facility
permits the Company to have one or more portions of the outstanding balance of
its loan accrue interest at a LIBOR rate plus applicable margin. The Company
elected to have $9,500,000 accrue interest at LIBOR plus applicable margin
(7.72%) effective June 25, 1999 for a period of 90 days. The Company's previous
loan agreement with Foothill Capital Corporation included a revolving credit
facility, which bore interest at prime plus 1/2% and a term loan which bore
interest at 18.9%. The Company had average borrowings under its revolving credit
facility of $13,225,900 during the quarter ended July 31, 1999 as compared to
average borrowings of $8,875,400 under its revolving credit facility and
$10,673,600 under the term loan during the quarter ended August 1, 1998. As a
result of revolving credit borrowings the Company recorded interest expense of
$287,900 during the quarter ended July 31, 1999.
TWENTY-SIX WEEKS ENDED JULY 31, 1999 AND AUGUST 1, 1998:
NET SALES. Net sales decreased $5,431,200 or 5.6% for the first six months of
fiscal 1999 compared to the year ago period. Comparative store sales decreased
5.6%. The decrease in net sales is a result of the strategic decision to shorten
the first quarter clearance period and delay the promotion of the July 1999
clearance event in order to emphasize the value of the Today's Man brand and
everyday low price philosophy. There were 25 superstores in operation at July
31, 1999 and August 1, 1998, respectively.
GROSS PROFIT. Gross profit as a percentage of net sales decreased to 35.3% for
the first six months of 1999 compared to 35.5% for the first six months 1998.
The decrease in the gross profit percentage is a result of more markdowns taken
in order to cleanse inventories in anticipation of the Fall 1999 selling season.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $2,944,100 or 9.4% in the first six months of
fiscal 1999, and increased as a percentage of sales to 37.1% from 32.1% in the
comparable period of fiscal 1998. The dollar increase is due primarily to an
increase in store payroll, occupancy and advertising costs of $2,272,000 or 13%,
representing 22.0% of sales compared with 19.6% of sales for the year ago
period. $1,100,000 of the increase was related to the cost of a clearance event
to cleanse seasonal inventories at the end of the six-month period that ended
July 31, 1999. The Company also incurred approximately $644,000 in additional
administrative expenses related to the replenishment program and an investment
in human resources.
INTEREST EXPENSE AND OTHER INCOME, NET. Interest expense, interest income and
other expense, net decreased by $997,000 from the first six months of fiscal
1998. The decrease in interest expense is attributable to the refinancing of the
Company's revolving credit facility with Mellon Bank on December 4, 1998, which
bears interest at prime (8.0% at July 31, 1999). The Mellon Bank facility
permits the Company to have one or more portions of the outstanding balance of
its loan accrue interest at a LIBOR rate plus applicable margin. The Company
elected to have $9,500,000 accrue interest at LIBOR plus applicable margin
(7.72%) effective June 25, 1999 for a period of 90 days. The Company had average
borrowings under its revolving credit facility of $13,438,800 during the six
month period ended July 31, 1999 as compared to average borrowings of $6,898,200
under its revolving credit facility and $10,673,600 under the term loan during
the six month period ended August 1, 1998. As a result of revolving credit
borrowings the Company recorded interest expense of $534,700 during the quarter
ended July 31, 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of working capital are cash flow from
operations and borrowings under the revolving credit facility. At July 31, 1999,
the Company had working capital of $34,081,000 as compared with $31,927,200 at
January 30, 1999.
On December 4, 1998, the Company entered into a Loan and Security Agreement
with Mellon Bank, N. A., ("Mellon") individually and as agent. The Loan and
Security Agreement provides for a $45.0 million revolving credit facility. The
Company has granted Mellon a lien on its tangible and intangible assets to
secure this term loan and revolving credit facility. Proceeds from this loan
were used to refinance the Company's previous revolving credit facility and term
loan from Foothill Capital Corporation. As a result of this refinancing, the
Company incurred a prepayment penalty of approximately $720,000 and wrote off
approximately $640,000 of unamortized debt issuance costs. These amounts were
offset by approximately $315,000 in accrued debt discount and related
liabilities and approximately $387,000 in income tax benefits related to this
extraordinary item.
The Mellon revolving credit facility bears interest at the option of the
Company at prime (8.00% at July 31, 1999) or LIBOR (5.22% at July 31, 1999) plus
a margin ranging from 1.75% to 3.25% depending upon the Company's EBITDA, has a
term of five years and includes a $20.0 million sublimit for letter of credit
advances. Availability under the revolver is determined by a formula based on
inventory and credit card receivables, less applicable reserves.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
The Mellon Loan and Security Agreement contains financial covenants
including tangible net worth, indebtedness to tangible net worth and fixed
charge coverage ratios, and limitations on new store openings and capital
expenditures as well as restrictions on the payment of dividends. In April 1999
the Company and Mellon amended the Loan Agreement to allow for the inclusion of
participant lenders and to modify certain other provisions, including the
tangible net worth and fixed charge coverage ratio covenant. The Company was in
compliance with all covenants, as amended, as of and for the quarter ended July
31, 1999.
The Company believes that the sources of capital above and internally
generated funds will be adequate to meet the Company's anticipated needs through
fiscal 1999.
YEAR 2000 COMPLIANCE
The Company is conducting a comprehensive review of its information
technology and non information technological systems to determine which systems
will require modification to enable processing of transactions related to the
year 2000 and beyond. The primary information systems upon which the Company
relies for its daily operations are the point of sale register systems, its
merchandising system and its general ledger accounting systems. The Company has
completed testing of its point of sale and existing general ledger system and
concluded that these systems are capable of processing transactions in the year
2000 and beyond. The Company's merchandising system will require remediation
that is estimated to cost less than $250,000. A further and complete analysis of
the Company's internal systems has indicated that despite the systems' ability
to properly process transactions related to the year 2000 and beyond, the
Company's overall operations would be better served by replacing the existing
general ledger and merchandising systems. As of January 30, 1999, the Company
has completed the installation of its new general ledger system. The Company's
new merchandising system has been warranted to be a year 2000 compliant system
by the supplier, and installation is currently in progress. A contingency plan
to remediate the existing merchandising system is scheduled for completion by
October 29, 1999. The Company estimates that it will spend an additional
$525,000 to $725,000 of budgeted funds through the end of the fiscal year ending
January 30, 2000 ("Fiscal 1999") to replace its existing merchandise and
financial accounting systems. Included in fixtures and equipment in process for
the quarter ended July 31, 1999 is approximately $1,256,600 of new system costs.
One of the primary requirements imposed by the Company on its new systems
vendors is certification of year 2000 compliance and compatibility. The costs
for new systems will be capitalized and depreciated, to the extent permitted by
generally accepted accounting principles, in accordance with the Company's fixed
asset policy.
In an effort to determine and ensure that there would be no material and
adverse impact on the results of the Company's operations caused by non
informational technological systems, an internal committee was developed using a
cross section of all disciplines within the Company. All of the Company's
vendors and suppliers were polled and asked to evaluate and confirm their
abilities to process transactions in the year 2000 and beyond. This committee,
which reports directly to the Company's Chief Financial Officer, is currently
evaluating responses from vendors and has preliminarily identified all mission
critical non-information technological systems. These systems will be tested and
contingency plans will be developed for those systems deemed to be
non-compliant. It is the committee's intention to complete its testing and
contingency planning before September 30, 1999. As of September 10, 1999,
contingency plans are being developed.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
If the Company's present efforts to address year 2000 compliance issues are
not successful, or if the systems of its suppliers are not compliant, the
Company may be unable to engage in normal business activities for a period of
time after January 1, 2000. As a result the Company would be unable to recognize
income. The Company also may lose existing or potential clients and its
reputation in the industry might be damaged.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The Company is a retail company doing business within the United States.
Its primary market risk is exposure to interest rates fluctuations on its debt
instruments. The Company's bank revolving credit facility bears interest at
variable rates. The variable interest rate is the rate in effect at the quarter
ended July 31, 1999, and it fluctuates with the lending bank's prime rate or
LIBOR rates.
11
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None - not applicable
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None - not applicable
Item 3. DEFAULTS UPON SENIOR SECURITIES
None - not applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
The Annual Meeting of Shareholders of the Company was held on June 23,
1999. At the Annual Meeting, the shareholder elected Larry Feld for a term of
four years as described below:
Name For Withheld Authority
---- --- ------------------
Larry Feld 21,933,190 155,779
Verna K. Gibson 21,935,372 153,597
In addition, the terms of the following directors continued after the
Annual Meeting:
David Feld
Larry Feld
Ira Brind
Verna K. Gibson
Bernard J. Korman
Randall Lambert
Item 5. OTHER INFORMATION
None - not applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
None - not applicable
REPORTS ON FORM 8-K
None - not applicable
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TODAY'S MAN, INC.
(Registrant)
Date: September 13, 1999 /s/ DAVID FELD
---------------------------------
David Feld
Chairman of the Board and
Chief Executive Officer
Date: September 13, 1999 /s/ FRANK E. JOHNSON
---------------------------------
Frank E. Johnson
Executive Vice President, Chief Financial
Officer and Treasurer
Principal Financial Officer
Date: September 13, 1999 /s/ BARRY S. PINE
---------------------------------
Barry S. Pine
Vice President and Controller
Principal Accounting Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Balance Sheets at July 31, 1999 and the Condensed
Consolidated Statements of Operations for the twenty-six weeks ended July 31,
1999 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-29-2000
<PERIOD-END> JUL-31-1999
<CASH> 230,900
<SECURITIES> 0
<RECEIVABLES> 2,059,200
<ALLOWANCES> (20,800)
<INVENTORY> 34,061,000
<CURRENT-ASSETS> 42,482,000
<PP&E> 51,828,800
<DEPRECIATION> (18,640,500)
<TOTAL-ASSETS> 77,775,800
<CURRENT-LIABILITIES> 8,400,600
<BONDS> 0
0
0
<COMMON> 48,451,600
<OTHER-SE> 2,777,800
<TOTAL-LIABILITY-AND-EQUITY> 77,775,800
<SALES> 92,402,300
<TOTAL-REVENUES> 92,402,300
<CGS> 59,795,400
<TOTAL-COSTS> 59,795,400
<OTHER-EXPENSES> 34,300,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 534,700
<INCOME-PRETAX> (2,227,800)
<INCOME-TAX> (762,500)
<INCOME-CONTINUING> (1,465,300)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,465,300)
<EPS-BASIC> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
